PRACTICAL SIGNIFICANCE OF A PRIORI ADAPTATION OF INVESTMENT PROJECTS TO INCREASE THEIR EFFECTIVENESS

Abstract

The article considers possible application of the real options theory in the evaluation and management of investment projects, with the aim of overcoming existing problems in this area. First of all, it’s a high degree of uncertainty of the implementation environment of a project, as well as not taken into account by traditional methods possibilities of making management decisions at every stage of the project implementation. Such possibilities, inherent in the investment project or specifically embedded in it at the stage of planning, appear as real options. The article reveals the essence of the concept “real option” as the basis of a priori enhancement of an adaptive potential of the investment project, from the standpoint of increasing its efficiency and/or reducing the risk of losses. The material set forth in the article is illustrated by a practical example for a clearer understanding of a priori optional performance management of investment projects. Using the example of a contingent optional investment project the application of a real option-asset and a real option-opportunity is examined. The example clearly shows that a more professional review of the project, including its a priori adaptation and its optional features, may transfer the project from the category of economically unprofitable in the category of economically profitable. The example also illustrates key tasks related to practical implementation of the suggested approach.